FINANCE Secretary Carlos Dominguez III placed the Philippine Crop Insurance Corp. (PCIC) under the supervision of the Insurance Commission (IC) to empower the latter to regularly review the financial affairs, condition and activities of the state-run agricultural insurance company.
With Departmental Order No. 038.2022 signed June 28, Dominguez said the results of the review conducted on the PCIC “will be submitted by the IC to the DOF (Department of Finance).”
In September of last year, President Duterte issued Executive Order (EO) No. 148 transferring the PCIC from the Department of Agriculture (DA) to the DOF as an attached agency “for the coordination of policies and programs and general supervision”.
The PCIC Board of Directors was also reorganized under EO 148 with the DOF Secretary as Chairman.
Based on this presidential directive and pursuant to Article 253 of the Insurance Code, as amended, which mandates the IC to conduct a review of the business, financial condition and method of business of companies owned and controlled by the state (GOCC) engaged in social activities or private insurance, Dominguez placed the PCIC under the regulatory oversight of the IC.
“In view of the above, the PCIC is placed under the supervision of the IC. The IC is hereby instructed to conduct a review of the affairs, financial condition and mode of operation of the PCIC every three (3) years, or as often as required by the Commissioner of Insurance or the Secretary of Finance. The results of this review will be submitted by the IC to the DOF,” Dominguez said in his DO.
The order takes effect immediately.
Earlier, a World Bank (WB) study recommending reforms in the PCIC found that the state corporation’s current approach to agricultural insurance does not provide value for money to taxpayers or protection. suitable for farmers.
The PCIC is also “highly exposed to disaster-related losses that are not reinsured”, according to the study by a team from the World Bank’s Catastrophe Risk Finance and Insurance Program (DRFIP).
This study, which was recently presented to the PCIC Board of Directors, found that while government premium subsidies to PCIC have increased rapidly over the years, agricultural insurance has only reached a third farmers across the country and is not well targeted to ensure taxpayers get value for money.
The study also found that PCIC’s high quality rating, capital management, financial reporting and other aspects of its operations are not in line with international best practices.
PCIC’s insurance products are also not suitable for the majority of Filipino farmers, especially smallholders and subsistence producers, according to the study. (RP)